SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

 

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER 

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE

 SECURITIES EXCHANGE ACT OF 1934

 

November 8, 2019

 

 

 

Commission File Number: 001-32827

 

 

 

MACRO BANK INC.

(Translation of registrant’s name into English)

 

 

 

Avenida Eduardo Madero 1182

Ciudad Autónoma de Buenos Aires C1106 ACY

Tel: 54 11 5222 6500

 

(Address of registrant’s principal executive offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x Form 40-F ¨

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes ¨ No x

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes ¨ No x

 

 

 

 

 

 

 

 

 

  3Q19 Earnings Release

 

Banco Macro Announces Results for the Third Quarter of 2019

 

Buenos Aires, Argentina, November 8, 2019 – Banco Macro S.A. (NYSE: BMA; BCBA: BMA) (“Banco Macro” or “BMA” or the “Bank”) announced today its results for the third quarter ended September 30, 2019 (“3Q19”). All figures are in Argentine pesos (Ps.)

 

Summary

 

• The Bank’s net income totaled Ps.13.2 billion in 3Q19. This result was 87% higher than the Ps.7 billion posted in 2Q19 and 243% higher than in 3Q18. In 3Q19, the accumulated annualized return on average equity (“ROAE”) and the accumulated annualized return on average assets (“ROAA”) were 57.3% and 9.4%, respectively. In 3Q19 Recurring Net Income totaled Ps.15.5 billion increasing 99% or Ps.7.7 billion compared with the previous quarter.

 

• In 3Q19, Banco Macro’s financing to the private sector grew 10% or Ps.18.1 billion quarter over quarter (“QoQ”) totaling Ps.192.8 billion and increased 15% or Ps.24.5 billion year over year (“YoY”). In the quarter, growth was driven by commercial loans, among which Overdrafts stand out, with a 78% increase QoQ. Meanwhile within consumer loans, credit card loans increased 12% QoQ.

 

• In 3Q19, Banco Macro’s total deposits decreased 9% or Ps.25.1 billion QoQ, totaling Ps.259.2 billion and representing 79% of the Bank’s total liabilities. Private sector deposits decreased 8% or Ps.22 billion QoQ.

 

• Banco Macro continued showing a strong solvency ratio, with excess capital of Ps.60.0 billion, 26.5% regulatory capital ratio – Basel III and 18.9% Tier 1 Ratio. In addition, the Bank’s liquid assets remained at an adequate level, reaching 61% of its total deposits in 3Q19.

 

• As of 3Q19, the efficiency ratio reached 32.5%, improving from the 37.6% posted in 3Q18.

 

• In 3Q19, the Bank’s non-performing to total financing ratio was 1.9% and the coverage ratio reached 124.16%.

 

3Q19 Earnings Release Conference Call   IR Contacts in Buenos Aires:
   
Friday, November 12, 2019
Time: 10:00 a.m. Eastern Time | 12:00 p.m. Buenos Aires Time
Jorge Scarinci
Chief Financial Officer
     
To participate, please dial:   Nicolás A. Torres
Argentina Toll Free: Webcast Replay: click here   Investor Relations
(011) 3984 5677    
Participants Dial In (Toll Free): Available from 11/12/2019 through Phone: (54 11) 5222 6682
+1 (844) 450 3847 11/26/2019 E-mail: investorelations@macro.com.ar
Participants International Dial In:    
+1 (412) 317 6370   Visit our website at:
Conference ID: Banco Macro   www.macro.com.ar/relaciones-inversores
Webcast: click here    

 

2

 

 

  3Q19 Earnings Release

 

Disclaimer

 

This press release includes forward-looking statements. We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and financial trends affecting our business. Many important factors could cause our actual results to differ substantially from those anticipated in our forward-looking statements, including, among other things: inflation; changes in interest rates and the cost of deposits; government regulation; adverse legal or regulatory disputes or proceedings; credit and other risks of lending, such as increases in defaults by borrowers; fluctuations and declines in the value of Argentine public debt; competition in banking and financial services; deterioration in regional and national business and economic conditions in Argentina; and fluctuations in the exchange rate of the peso.

 

The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date they were made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this press release because of new information, future events or other factors. In light of the risks and uncertainties described above, the forward-looking events and circumstances discussed in this press release might not occur and are not guarantees of future performance.

 

This report is a summary analysis of Banco Macro's financial condition and results of operations as of and for the period indicated. For a correct interpretation, this report must be read in conjunction with all other material periodically filed with the Comisión Nacional de Valores (www.cnv.gob.ar), the Securities and Exchange Commission (www.sec.gov), Bolsas y mercados Argentinos (www.byma.com.ar) and the New York Stock Exchange (www.nyse.com). In addition, the Central Bank (www.bcra.gov.ar) may publish information related to Banco Macro as of a date subsequent to the last date for which the Bank has published information.

 

Readers of this report must note that this is a translation made from an original version written and expressed in Spanish. Consequently, any matters of interpretation should be referred to the original version in Spanish.

 

3

 

 

  3Q19 Earnings Release

 

This Earnings Release has been prepared in accordance with the accounting framework established by the Central Bank of Argentina (“BCRA”), based on International Financial Reporting Standards (“I.F.R.S.”) and the resolutions adopted by the International Accouting Standards Board (“I.A.S.B”) and by the Federación Argentina de Consejos Profesionales de Ciencias Económicas (“F.A.C.P.E.”) with the exception of (i) Expected losses of IFRS 9 “Financial Instruments” and (ii) IAS 29 “Financial Reporting in Hyperinflationary Economies” both temporarily excluded by the Central Bank of Argentina from the applicable accounting framework for Financial Institutions. Data and figures shown in this Earnings Release may differ from the ones shown in the 20-F annual report which shows the impact of the application of I.F.R.S 9 and IAS 29.

 

Results

 

Earnings per outstanding share were Ps.20.59 in 3Q19, 87% higher than 2Q19 and 256% higher than the result posted a year ago. On a yearly basis Net Income increased 244% while Earnings per Share increased 256%, given that the average amount of shares outstanding decreased in 3Q18, 4Q18 and 1Q19 due to the Share buyback program.

 

EARNINGS PER SHARE   MACRO Consolidated   Variation  
In MILLION $     3Q18     4Q18     1Q19     2Q19     3Q19     QoQ       YoY  
                                               
Net income -Parent Company- (M $)     3,828     5,243     7,343     7,033     13,158     87 %     244 %
Average # of shares outstanding (M)     662     643     639     639     639     0 %     -3 %
Average #of treasury stocks (shares repurchased) (M)     7     26     30     30     14     -53 %     102 %
Book value per avg. Outstanding share ($)     76     82     93     94     117     24 %     54 %
Shares Outstanding (M)     648     641     639     639     639     0 %     -1 %
Earnings per avg.  outstanding share ($)     5.78     8.15     11.49     11.01     20.59     87 %     256 %
                                               
Book value per avg. issued ADS (USD)     18.62     22.16     21.41     22.14     20.33     -8 %     9 %
Earnings per avg. outstanding ADS (USD)     1.41     2.16     2.65     2.59     3.58     38 %     153 %

 

Banco Macro’s 3Q19 net income of Ps.13.2 billion was 87% or Ps.6.1 billion higher than the previous quarter and 243% or Ps.9.3 billion higher YoY. This result represented an accumulated ROAE and ROAA of 57.3% and 9.4% respectively.

 

In 3Q19 Recurring Net Income was Ps.15.5 billion, 99% or Ps.7.7 billion higher than the result posted in 2Q19. (See table below for recurring net income)

 

4

 

 

  3Q19 Earnings Release

 

INCOME STATEMENT RECURRING   MACRO Consolidated     Variation  
In MILLION $   4Q18(¹)     1Q19(²)     2Q19(³)     3Q19(4)     QoQ  
                               
Net Interest Income     12,288       12,931       16,785       20,057       19 %
Net fee income     3,259       3,310       3,391       3,753       11 %
Subtotal (Net Interest Income + Net Fee Income)     15,547       16,241       20,176       23,810       18 %
Net Income from financial instruments at fair value through P&L     364       605       133       659       395 %
Income from assets at amortized cost     1       -17       0       -1       -  
Differences in quoted prices of gold and foreign currency     729       -167       333       1,497       350 %
Other operating income     413       736       817       1,071       31 %
Provision for loan losses     836       800       848       824       -3 %
Net Operating Income     16,218       16,598       20,611       26,212       27 %
Employee benefits     3,124       3,133       4,007       4,308       8 %
Administrative expenses     2,105       2,096       2,301       2,903       26 %
Depreciation and impairment of assets     215       290       317       366       15 %
Other operating expenses     2,916       3,104       2,886       4,382       52 %
Operating Income     7,858       7,975       11,100       14,253       28 %
Result from associates & joint ventures     33       26       23       17       -26 %
Result before taxes from continuing operations     7,891       8,001       11,123       14,270       28 %
Income tax     2,440       2,307       3,319       -1,263       -  
Net income from continuing operations     5,451       5,694       7,804       15,533       99 %
                                         
Recurring Net Income of the period     5,451       5,694       7,804       15,533       99 %
Non recurring income/loss of the period     -208       1,649       -772       -2,374       208 %
                                         
Net Income (Recurring + Non Recurring)     5,243       7,343       7,032       13,159       87 %

 

(¹) Excluding provisions for class actions, deferred tax

(²) Excluding Prisma & Molinos Cañuelas

(³) Excluding results related to social security contributions (Employee benefits & Other Operating income), sale of real estate (Other Operating income), Prisma dividends (Result from associates & joint ventures) and Income tax

(4) Excluding IFRS adjustment on Government Securities, Severance Pay and provisions for class actions

 

Net operating income (before G&A and personnel expenses) was Ps.26.2 billion in 3Q19, increasing 26% or Ps.5.4 billion compared to 2Q19 and 103% or Ps.13.3 billion compared to the previous year.

 

Operating income (after G&A and personnel expenses) was Ps.11.9 billion in 3Q19, 28% or Ps.2.6 billion higher than in 2Q19 and 114% or Ps.6.3 billion higher than a year ago.

 

It is important to emphasize that this result was obtained with a leverage of 5.3x assets to equity ratio.

 

5

 

 

  3Q19 Earnings Release

 

INCOME STATEMENT   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
                                                         
Net Interest Income     10,323       12,288       12,931       16,785       20,057       19 %     94 %
Net fee income     2,869       3,259       3,310       3,391       3,753       11 %     31 %
Subtotal (Net Interest Income + Net Fee Income)     13,192       15,547       16,241       20,176       23,810       18 %     80 %
Net Income from financial instruments at fair value through P&L     499       364       1,974       133       659       395 %     32 %
Income from assets at amortized cost     -3       1       -17       0       -1       -       -  
Differences in quoted prices of gold and foreign currency     -1,244       729       -51       333       1,497       350 %     -220 %
Other operating income     1,202       413       3,114       983       1,071       9 %     -11 %
Provision for loan losses     732       836       2,154       848       824       -3 %     13 %
Net Operating Income     12,914       16,218       19,107       20,777       26,212       26 %     103 %
Employee benefits     2,720       3,124       3,133       4,916       4,428       -10 %     63 %
Administrative expenses     1,776       2,105       2,096       2,301       2,903       26 %     63 %
Depreciation and impairment of assets     187       215       290       317       366       15 %     96 %
Other operating expenses     2,693       3,213       3,104       3,950       6,636       68 %     146 %
Operating Income     5,538       7,561       10,484       9,293       11,879       28 %     114 %
Result from associates & joint ventures     12       33       26       613       17       -97 %     42 %
Result before taxes from continuing operations     5,550       7,594       10,510       9,906       11,896       20 %     114 %
Income tax     1,718       2,351       3,166       2,874       -1,263       -       -  
Net income from continuing operations     3,832       5,243       7,344       7,032       13,159       87 %     243 %
                                                         
Net Income of the period     3,832       5,243       7,344       7,032       13,159       87 %     243 %
Net income of the period attributable to parent company     3,828       5,243       7,343       7,033       13,159       87 %     244 %
Net income of the period atributable to minority interest     4       0       1       -1       1       -       -75 %

 

The Bank’s 3Q19 net interest income totaled Ps.20.1 billion, 19% or Ps.3.3 billion higher than in 2Q19 and 94% or Ps.9.7 billion higher YoY.

 

In 3Q19 interest income totaled Ps.35.6 billion, 14% or Ps.4.3 billion higher than in 2Q19 and 112% or Ps.18.8 billion higher than in 3Q18.

 

Income from interest on loans and other financing totaled Ps.16.1 billion, 9% or Ps.1.4 billion higher compared with the previous quarter. On a yearly basis Income from interest on loans increased 30% or Ps.3.7 billion.

 

In 3Q19 income from government and private securities increased 30% or Ps.4.5 billion QoQ and 336% or Ps.15 billion compared with the same period of last year. This result is explained 88% by income from government and private securities through other comprehensive income (Central Bank Notes) and the remaining 12% is explained by income of government and private securities at amortized cost.

 

In 3Q19 Differences foreign currency totaled a Ps.1.5 billion gain, due to the 36% argentine peso depreciation against the US dollar and the Bank’s long spot dollar position during the quarter and FX trading results (Ps.1.2 billion). It should be noted that if income from investment in derivative financing instruments is added then differences in quoted prices of gold and foreign currency in 3Q19 resulted in a Ps.2.2 billion gain.

 

6

 

 

  3Q19 Earnings Release

 

DIFFERENCES IN QUOTED PRICES OF
GOLD AND FOREIGN CURRENCY
  MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
(1) Differences in quoted prices of gold and foreing currency     -1,244       729       -51       333       1,496       349 %     -  
Translation of FX assets and liabilities to Pesos     -1,759       354       -481       -129       332       -       -  
Income from foreign currency exchange     515       375       430       462       1,164       152 %     126 %
                                                         
(2) Net Income from financial assets and liabilities at fair value through P&L     235       -22       301       -12       735       -       213 %
Income from investment in derivative financing instruments     235       -22       301       -12       735       -       213 %
                                                         
(1) +(2) Total Result from Differences in quoted prices of gold and foreign currency     -1,009       707       250       321       2,231       595 %     -  

 

INTEREST INCOME   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Interest on Cash and due from Banks     5       15       31       35       86       146 %     1620 %
Interest from government securities     4,380       7,898       9,515       14,951       19,026       27 %     334 %
Interest from private securities     71       2       1       0       379       100 %     434 %
Interest on loans and other financing                                                        
To the financial sector     312       546       494       355       375       6 %     20 %
Interest on overdrafts     1,448       2,442       1,872       1,739       3,351       93 %     131 %
Interest on documents     856       1,089       1,201       1,086       961       -12 %     12 %
Interest on mortgages loans     1,101       1,795       1,310       1,673       1,471       -12 %     34 %
Interest on pledged loans     142       148       129       124       129       4 %     -9 %
Interest on personal loans     5,447       5,676       5,785       6,005       6,162       3 %     13 %
Interest on credit cards loans     1,788       2,371       2,567       2,677       2,589       -3 %     45 %
Interest on financial leases     40       57       44       43       28       -35 %     -30 %
Interest on other loans     1,211       1,447       1,124       1,029       1,018       -1 %     -16 %
Interest on Repos                                                        
From the BCRA     0       0       9       0       0       0 %     0 %
Other financial institutions     8       328       313       1,617       7       -100 %     -13 %
Total Interest income     16,809       23,814       24,395       31,334       35,582       14 %     112 %
                                                         
Income from Interest on loans     12,345       15,571       14,526       14,731       16,084       9 %     30 %

 

The Bank’s 3Q19 interest expense totaled Ps.15.5 billion, increasing 7% (Ps.1 billion) compared to the previous quarter and 139% (Ps.9 billion) compared to 3Q18.

 

In 3Q19, interest on deposits represented 91% of the Bank’s total interest expense, increasing 5% or Ps.614 million QoQ. On a yearly basis, interest on deposits increased 149% or Ps.8.5 billion.

 

7

 

 

  3Q19 Earnings Release

 

INTEREST EXPENSE   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Deposits                                                        
              Interest on checking accounts     142       491       118       52       105       102 %     -26 %
              Interest on saving accounts     91       140       97       153       113       -26 %     24 %
              Interest on time deposits     5,464       10,013       10,372       13,368       13,969       4 %     156 %
Interest on other financing from BCRA
and financial inst.
    48       45       43       62       62       0 %     29 %
Repos                                                        
              Other financial institutions     66       64       71       107       54       -50 %     -18 %
Interest on corporate bonds     406       478       452       470       787       67 %     94 %
Interest on subordinated bonds     252       267       280       311       386       24 %     53 %
Interest on other financial liabilities     17       28       31       26       49       88 %     188 %
Total financial expense     6,486       11,526       11,464       14,549       15,525       7 %     139 %
                                                         
Expenses from interest on deposits     5,697       10,644       10,587       13,573       14,187       5 %     149 %

 

As of 3Q19, the Bank’s net interest margin (including FX) was 19.1%, higher than the 17.6% posted in 2Q19 and the 14% in 3Q18.

 

As of 3Q19 Net Interest Margin (excluding FX) was 18.5%, higher than the 17.5% posted in 2Q19 and the 15.2% in 3Q18. This result shows the Bank’s ability to defend its margin.

 

ASSETS & LIABILITIES PERFORMANCE (AR$)   MACRO Consolidated  
In MILLON $   3Q18           4Q18           1Q19           2Q19     3Q19  
Yields & rates in annualized
nominal %
  AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT  
                                                             
Interest-earning assets                                                                                
Cash and Deposits in Banks     24,596       0.0 %     31,969       0.0 %     32,270       0.0 %     34,030       0.0 %     24,551       0.0 %
Goverment & Securities at fair value trhough P&L     1,114       -10.0 %     1,355       35.1 %     1,715       14.9 %     1,438       9.5 %     2,375       -23.4 %
Loans & Other Financing                                                                                
Public Sector     2,112       46.2 %     2,069       69.8 %     1,401       57.0 %     952       49.7 %     1,533       66.8 %
Financial Sector     3,827       31.7 %     4,247       50.3 %     4,736       41.7 %     3,143       44.4 %     2,974       49.5 %
Private Sector     121,071       37.2 %     123,050       45.2 %     122,286       43.5 %     116,892       46.0 %     124,450       46.4 %
Other debt securities     39,796       45.4 %     52,738       60.0 %     71,886       54.1 %     92,118       64.9 %     112,092       68.7 %
Other interest-earning assets     7,033       12.5 %     8,752       23.9 %     10,259       72.7 %     16,603       43.0 %     9,614       2.8 %
Total interest-earning assets     199,549       33.1 %     224,180       41.7 %     244,553       41.9 %     265,176       46.3 %     277,589       49.3 %
                                                                                 
Non interest-earning assets     12,709               13,107               14,266               20,860               15,991          
Total Average Assets     212,258               237,287               258,819               286,036               293,580          
                                                                                 
Interest-bearing liabilities                                                                                
Deposits                                                                                
Public Sector     9,970       21.5 %     14,323       35.5 %     16,375       33.0 %     16,069       34.8 %     12,752       34.8 %
Financial Sector     0       0.0 %     0       0.0 %     0       0.0 %     0       0.0 %     0       0.0 %
Private Sector     94,478       20.9 %     112,920       32.0 %     122,198       29.7 %     137,077       34.4 %     146,717       34.2 %
BCRA and other financial institutions     1,155       14.4 %     492       36.3 %     898       19.4 %     513       47.7 %     510       46.7 %
Corporate bonds     7,120       22.6 %     6,359       29.8 %     6,189       29.6 %     6,161       30.6 %     6,083       51.3 %
Subordinated bonds     0       0.0 %     0       0.0 %     0       0.0 %     0       0.0 %     0       0.0 %
Other interest-bearing liabilities     586       48.7 %     453       56.1 %     723       40.4 %     1,133       38.6 %     366       46.7 %
Total int.-bearing liabilities     113,309       21.2 %     134,547       32.4 %     146,383       30.1 %     160,953       34.4 %     166,428       35.0 %
                                                                                 
Total non int.-bearing liab. & equity     43,257               46,582               52,988               60,779               61,607          
                                                                                 
Total Average Liabilities & Equity     156,566               181,129               199,371               221,732               228,035          
                                                                                 
Assets Performance             16,660               23,554               25,293               30,590               34,497  
Liabilities Performance             6,044               10,980               10,857               13,808               14,692  
Net Interest Income             10,616               12,574               14,436               16,782               19,805  
Total interest-earning assets             199,549               224,180               244,553               265,176               277,589  
Net Interest Margin (NIM)             21.1 %             22.3 %             23.9 %             25.4 %             28.3 %

 

8

 

 

  3Q19 Earnings Release

 

ASSETS & LIABILITIES PERFORMANCE (USD)   MACRO Consolidated  
In MILLON $   3Q18           4Q18           1Q19           2Q19     3Q19  
Yields & rates in annualized
nominal %
  AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT     AVERAGE
BALANCE
    INT  
                                                             
Interest-earning assets                                                                                
Cash and Deposits in Banks     28,743       0.1 %     36,428       0.2 %     41,863       0.3 %     51,749       0.3 %     61,991       0.6 %
Goverment & Securities at fair value trhough P&L     275       -53.4 %     342       -9.3 %     209       34.9 %     279       8.6 %     284       18.2 %
Loans & Other Financing                                                                                
Financial Sector     407       5.8 %     489       6.5 %     486       7.5 %     489       9.0 %     292       10.9 %
Private Sector     33,833       5.1 %     43,259       5.8 %     47,627       6.1 %     55,590       6.0 %     59,228       6.1 %
Other debt securities     74       10.7 %     86       9.2 %     31       13.1 %     0       0.0 %     0       0.0 %
Other interest-earning assets     1,740       0.0 %     2,162       0.2 %     2,943       -0.1 %     3,084       -0.1 %     3,357       -0.2 %
Total interest-earning assets     65,072       2.5 %     82,766       3.1 %     93,159       3.4 %     111,191       3.2 %     125,152       3.2 %
                                                                                 
Non interest-earning assets     4,123               3,231               2,724               93               3,960          
Total Average Assets     69,195               85,997               95,883               111,284               129,112          
                                                                                 
Interest-bearing liabilities                                                                                
Deposits                                                                                
Public Sector     412       0.0 %     534       0.0 %     873       0.0 %     1,517       0.0 %     1,818       0.0 %
Private Sector     44,096       1.6 %     53,499       1.9 %     60,155       2.0 %     71,749       2.3 %     76,150       2.1 %
BCRA and other financial institutions     1,740       3.9 %     2,455       4.5 %     2,468       4.9 %     2,117       4.7 %     2,612       5.2 %
Subordinated bonds     12,987       7.7 %     15,024       7.1 %     15,868       7.2 %     17,821       7.0 %     20,564       7.4 %
Other interest-bearing liabilities     2       0.0 %     1       0.0 %     9       0.0 %     1       0.0 %     1       0.0 %
Total int.-bearing liabilities     59,237       3.0 %     71,513       3.0 %     79,373       3.1 %     93,205       3.2 %     101,145       3.3 %
                                                                                 
Total non int.-bearing liab.     13,381               16,873               16,378               19,027               23,812          
                                                                                 
Total Average Liabilities     72,618               88,386               95,751               112,232               124,957          
                                                                                 
Assets Performance             413               645               775               887               1,010  
Liabilities Performance             442               547               606               741               832  
Net Interest Income             -29               98               169               146               178  
Total interest-earning assets             65,072               82,766               93,159               111,191               125,152  
Net Interest Margin (NIM)             -0.2 %             0.5 %             0.7 %             0.5 %             0.6 %

 

In 3Q19 Banco Macro’s net fee income totaled Ps.3.8 billion, 11% or Ps.362 million higher than in 2Q19 and 31% or Ps.885 million higher than the same period of last year.

 

In the quarter, fee income totaled Ps.4.1 billion, 13% or Ps.470 million higher than in 2Q19. Fees charged on deposit accounts and credit card fees stand out; with a 10% and 21% increase respectively QoQ. On a yearly basis, fee income increased 37% or Ps.1.1 billion.

 

In the quarter, total fee expenses increased 39% or Ps.108 million. On a yearly basis, fee expenses increased 167% or Ps.242 million.

 

NET FEE INCOME   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
AFIP & Collection services     20       21       22       23       24       4 %     20 %
Fees charged on deposit accounts     1,408       1,594       1,528       1,450       1,599       10 %     14 %
Mutual funds & securities fees     21       16       21       94       51       -46 %     143 %
ATM transactions fees     14       16       158       180       232       29 %     1557 %
ANSES fees     9       8       8       9       8       -11 %     -11 %
Insurance fees     181       173       225       233       230       -1 %     27 %
Corporate services fees     279       317       332       404       496       23 %     78 %
Financial agent fees (Provinces)     153       170       172       210       216       3 %     41 %
Debit card fees     138       188       181       192       229       19 %     66 %
Credit card fees     642       778       757       727       883       21 %     38 %
Credit related fees     148       195       147       148       172       16 %     16 %
Total fee income     3,013       3,476       3,551       3,670       4,140       13 %     37 %
                                                         
Total fee expense     145       217       241       279       387       39 %     167 %
                                                         
Net fee income     2,868       3,259       3,310       3,391       3,753       11 %     31 %

 

In 3Q19 Net Income from financial assets and liabilities at fair value through profit or loss totaled Ps.659 million, increasing 395% or Ps.526 million compared to 2Q19. Profit from investment in derivative financing instruments and profit from sale of financial assets at fair value stand out with a Ps.747 million and Ps.199 million increase respectively. Income from government securities decreased Ps.367 million in 3Q19.

 

9

 

 

  3Q19 Earnings Release

 

NET INCOME FROM FINANCIAL ASSETS AND
LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
  MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Profit or loss from government securities     215       165       165       39       -328       -       -  
Profit or loss from private securities     66       168       149       145       136       -6 %     107 %
Profit or loss from investment in derivative
financing instruments
    235       -22       301       -12       735       -       213 %
Profit or loss from other financial assets     61       65       51       49       12       -76 %     -80 %
Profit or loss from investment in equity instruments     1       4       1,401       9       0       -100 %     -100 %
Profit or loss from the sale of financial assets at fair value     -85       -16       -91       -97       102       -       -  
Income from financial assets at fair value through profit or loss     493       364       1,976       133       657       394 %     33 %
                                                         
Profit or loss from derivative financing instruments     6       0       -2       0       2       100 %     -67 %
Income from financial liabilities at fair value through profit or loss     6       0       -2       0       2       100 %     -67 %
                                                         
NET INCOME FROM FINANCIAL ASSETS AT FAIR
VALUE THROUGH PROFIT OR LOSS
    499       364       1,974       133       659       395 %     32 %

 

In the quarter Other Operating Income totaled Ps.1.1 billion, increasing 9% or Ps.88 million compared to 2Q19. On a yearly basis Other Operating Income increased 11% or Ps.131 million.

 

OTHER OPERATING INCOME   MACRO Consolidated     Variation  
IN MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Credit and debit cards     0       0       37       55       44       -20 %     100 %
Lease of safe deposit boxes     57       62       72       80       91       14 %     60 %
Other service related fees     240       192       257       170       319       88 %     33 %
Sale of real estate and other
non-financial assets
    0       24       4       166       0       -100 %     0 %
Other adjustments and interest
from other receivables
    73       69       133       168       165       -2 %     125 %
Initial recognition of loans     47       -51       28       42       -8       -       -  
Sale of property, plant and equipment     1       36       2       3       5       67 %     400 %
Others     784       81       2,581       299       455       52 %     -42 %
Other Operating Income     1,202       413       3,114       983       1,071       9 %     -11 %

 

In 3Q19 Banco Macro’s administrative expenses plus employee benefits totaled Ps.7.3 billion, 2% or Ps.114 million higher than the previous quarter. On a yearly basis administrative expenses plus employee benefits increased 63% or Ps.2.8 billion, due to higher expenses related to employee benefits (salary increases and severance pay) and other administrative expenses (including Director’s fees).

 

Employee benefits decreased 10% or Ps.488 million QoQ (the main driver for the decrease were lower social security contributions (Ps.887 million)). On a yearly basis Employee benefits increased 63% or Ps.1.7 billion.

 

As of 3Q19, the accumulated efficiency ratio reached 32.5%, improving from the 33.5% posted in 2Q19 and improving from the 37.6% posted in 3Q18. In 3Q19 expenses (employee benefits + G&A expenses + depreciation and impairment of assets) increased 2%, while income (net interest income + net fee income + differences in quoted prices of gold and foreign currency + other operating income + net income from financial assets at fair value through profit or loss – (Turnover Tax + Insurance on deposits)) increased 26% compared to 2Q19.

 

10

 

 

  3Q19 Earnings Release

 

PERSONNEL & ADMINISTRATIVE EXPENSES   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Employee benefits     2,720       3,124       3,133       4,916       4,428       -10 %     63 %
Remunerations     2,076       2,350       2,299       3,004       3,156       5 %     52 %
Social Security Contributions     403       453       476       1,555       668       -57 %     66 %
Compensation and bonuses     174       235       278       276       491       78 %     182 %
Employee services     67       86       80       81       113       40 %     69 %
Administrative Expenses     1,776       2,105       2,096       2,301       2,903       26 %     63 %
Taxes     214       236       266       300       322       7 %     50 %
Maintenance, conservation fees     243       293       280       316       335       6 %     38 %
Directors & statutory auditors´fees     174       233       323       290       555       91 %     219 %
Security services     200       195       212       220       253       15 %     27 %
Electricity & Communications     154       201       208       235       242       3 %     57 %
Other professional fees     145       191       164       199       219       10 %     51 %
Rental agreemets     88       105       53       48       38       -21 %     -57 %
Advertising & publicity     81       146       51       92       103       12 %     27 %
Personnel allowances     30       32       33       40       43       8 %     43 %
Stationary & Office Supplies     17       16       18       19       27       42 %     59 %
Insurance     15       24       21       25       28       12 %     87 %
Hired administrative services     5       5       4       4       2       -50 %     -60 %
Other     410       429       463       513       736       43 %     80 %
Total Administrative Expenses     4,496       5,229       5,229       7,217       7,331       2 %     63 %
                                                         
Total Employees     9,096       9,028       8,978       8,893       8,843                  
Branches     473       471       464       463       462                  
Efficiency ratio     39.1 %     35.8 %     28.6 %     38.3 %     31.1 %                
                                                         
Accumulated efficiency ratio     37.6 %     37.9 %     28.6 %     33.5 %     32.5 %                

 

In 3Q19, Other Operating Expenses totaled Ps.6.6 billion, increasing 68% or Ps.2.7 billion QoQ. Turnover Tax and Others stand out with a 16% (Ps.284 million) increase and a 125% (Ps.2.1 billion) increase respectively QoQ. The increase in Others is related to losses in the amount of Ps.2.6 billion due to the reprofiling of short term debt (Lecaps, Lelinks, Letes, Lecer notes) announced by the Government of Argentina on August 29, 2019 and higher credit card charges and taxes. On a yearly basis Other Operating Expenses increased 146% or Ps. 3.9 billion.

 

OTHER OPERATING EXPENSES   MACRO Consolidated     Variation  
MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Turnover Tax     1,600       1,749       1,855       1,831       2,115       16 %     32 %
Other provision charges     224       527       185       236       471       100 %     110 %
Deposit Guarantee Fund Contributions     82       91       104       118       135       14 %     65 %
Donations     20       18       35       37       36       -3 %     80 %
Insurance claims     16       17       11       10       13       30 %     -19 %
Others     751       811       914       1,718       3,866       125 %     415 %
Other Operating Expenses     2,693       3,213       3,104       3,950       6,636       68 %     146 %

 

In 3Q19 Banco Macro's income tax resulted in a Ps.1.3 billion gain. During this quarter and in accordance with applicable Income Tax Law and regulations and the evolution of Consumer Price Index the Bank decided to adjust income tax by inflation.

 

11

 

 

  3Q19 Earnings Release

 

Financial Assets

 

Private sector financing

 

The volume of “core” financing to the private sector (including loans, financial trust and leasing portfolio) totaled Ps.192.8 billion, increasing 10% or Ps.18.1 billion QoQ and 15% or Ps.24.5 billion YoY.

 

Within commercial loans, growth was driven by Overdrafts; with a 78% or Ps.12.3 billion increase QoQ.

 

The main growth in consumer lending was driven by credit card loans which grew 12% or Ps.3.4 million QoQ.

 

As of 3Q19, Banco Macro´s market share over private sector loans was 7.7%.

 

FINANCING TO THE PRIVATE SECTOR   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Overdrafts     16,121       16,897       11,132       15,832       28,131       78 %     74 %
Discounted documents     22,281       24,218       26,250       21,380       21,669       1 %     -3 %
Mortgages loans     12,999       12,667       12,733       12,172       12,944       6 %     0 %
Pledged loans     5,010       4,333       4,325       3,934       4,507       15 %     -10 %
Personal loans     56,691       56,413       57,095       56,459       56,200       0 %     -1 %
Credit Card loans     27,701       29,567       29,515       29,676       33,108       12 %     20 %
Others     21,091       19,717       23,393       24,766       23,633       -5 %     12 %
Interest     4,912       6,900       7,366       8,518       10,136                  
Total loan portfolio     166,806       170,712       171,809       172,737       190,328       10 %     14 %
Total loans in Pesos     121,837       125,374       117,783       119,172       136,488       15 %     12 %
Total loans in USD     44,969       45,338       54,026       53,565       53,840       1 %     20 %
Financial trusts     630       1,384       1,373       985       1,371       39 %     118 %
Leasing     485       446       386       335       292       -13 %     -40 %
Others     407       367       434       650       840       29 %     106 %
Total other financing     1,522       2,197       2,193       1,970       2,503       27 %     64 %
Total other financing in Pesos     1,215       1,787       1,578       1,017       1,500       47 %     23 %
Total other financing in USD     307       410       615       953       1,003       5 %     227 %
Total financing to the private sector     168,328       172,909       174,002       174,707       192,831       10 %     15 %
EOP FX (Pesos per USD)     40.8967       37.8083       43.3533       42.4483       57.5583       36 %     41 %
USD financing / Financing to the private sector     27 %     26 %     31 %     31 %     28 %                

 

12

 

 

  3Q19 Earnings Release

 

Public Sector Assets

 

In 3Q19, the Bank’s public sector assets (excluding LELIQs) to total assets ratio was 4.9%, higher than the 2.9% registered in the previous quarter, and higher than the 3.4% posted in 3Q18.

 

In 3Q19, a 36% or Ps.30.5 billion decrease in LELIQs securities position stands out. Banco Macro’s strategy during the quarter was to allocate excess liquidity in loans and other financial instruments.

 

In 3Q19 Other government securities increased 82% or Ps.8.7 billion.

 

PUBLIC SECTOR ASSETS   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Lebacs     651       0       0       0       1,020       0 %     57 %
Leliqs     34,260       55,070       98,918       85,344       54,898       -36 %     60 %
Other     8,770       10,333       10,901       10,630       19,346       82 %     121 %
Government securities     43,681       65,403       109,819       95,974       75,264       -22 %     72 %
Provincial loans     1,856       1,685       1,197       976       340       -65 %     -82 %
Loans     1,856       1,685       1,197       976       340       -65 %     -82 %
Purchase of government bonds     60       75       0       0       0       0 %     -100 %
Other receivables     60       75       0       0       0       0 %     -100 %
                                                         
TOTAL PUBLIC SECTOR ASSETS     45,597       67,163       111,016       96,950       75,604       -22 %     66 %
                                                         
TOTAL PUBLIC SECTOR LIABILITIES     0       0       0       0       0       0 %     0 %
                                                         
Net exposure     45,597       67,163       111,016       96,950       75,604       -22 %     66 %
                                                         
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)     10,686       12,093       12,098       11,606       19,686       70 %     84 %
                                                         
TOTAL PUBLIC SECTOR ASSETS (net of LEBAC/NOBAC/LELIQ)/TOTAL ASSETS     3.4 %     3.5 %     3.1 %     2.9 %     4.9 %                

 

Funding

 

Deposits

 

Banco Macro’s deposit base totaled Ps.259.2 billion in 3Q19, decreasing 9% or Ps.25.1 billion QoQ and increasing 22% or Ps.46.6 billion YoY and representing 79% of the Bank’s total liabilities.

 

On a quarterly basis, private sector deposits decreased 8% or Ps.22 billion, while public sector deposits decreased 13% or Ps.3.1 billion.

 

The decrease in private sector deposits was led by time deposits, which decreased 19% or Ps.28.4 billion, while demand deposits increased 4% or Ps.4.4 billion QoQ.

 

Within private sector deposits, peso deposits decreased 6% or Ps.9.8 billion, while US dollar deposits decreased 36% or USD765 million.

 

In line with Banco Macro’s strategy of reducing Leliq exposure during the quarter, the Bank proactively decided to reduce its peso deposit base.

 

As of 3Q19, Banco Macro´s market share over private sector deposits was 6.5%.

 

13

 

 

  3Q19 Earnings Release

 

DEPOSITS   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Public sector     20,074       19,354       28,192       23,565       20,438       -13 %     2 %
                                                         
Financial sector     150       148       211       244       293       20 %     95 %
                                                         
Private sector     192,345       218,452       244,208       260,450       238,471       -8 %     24 %
Checking accounts     23,808       24,375       24,510       29,161       35,112       19 %     37 %
Savings accounts     64,110       68,695       66,673       78,759       77,195       18 %     47 %
Time deposits     98,431       118,034       148,833       147,678       119,235       -1 %     84 %
Other     5,996       7,348       4,192       4,852       6,929       16 %     -2 %
Total     212,569       237,954       272,611       284,259       259,202       -9 %     22 %
                                                         
Pesos     140,558       166,597       187,632       191,752       178,844       -7 %     27 %
Foreign Currency (Pesos)     72,010       71,358       84,978       92,507       80,358       -13 %     12 %
                                                         
EOP FX (Pesos per USD)     40.8967       37.8083       43.3533       42.4483       57.5583       36 %     41 %
Foreign Currency (USD)     1,761       1,887       1,960       2,179       1,396       -36 %     -21 %
                                                         
USD Deposits / Total Deposits     34 %     30 %     31 %     33 %     31 %                

 

Banco Macro’s transactional deposits represent approximately 47% of its total deposit base as of 3Q19. These accounts are low cost and are not sensitive to interest rate increases.

 

Other sources of funds

 

In 3Q19, the total amount of other sources of funds decreased 24% or Ps.21.1 billion compared to 2Q19. In 3Q19 Shareholder’s Equity increased 22% or Ps.13.6 billion due to the positive result registered in the quarter. Subordinated corporate bonds increased 38% or Ps.6.5 billion QoQ as a consequence of the argentine peso devaluation against the US dollar registered during the quarter.

 

OTHER SOURCES OF FUNDS   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Central Bank of Argentina     22       24       20       24       31       29 %     41 %
Banks and international institutions     2,389       2,568       2,345       1,743       2,660       53 %     11 %
Financing received from Argentine financial institutions     815       406       745       430       652       52 %     -20 %
Subordinated corporate bonds     16,796       15,288       17,836       17,192       23,726       38 %     41 %
Corporate bonds     6,513       6,377       6,314       6,193       6,008       -3 %     -8 %
Shareholders' equity     50,963       54,636       62,085       62,733       76,373       22 %     50 %
Total other source of funds     77,498       79,299       89,345       88,315       109,450       24 %     41 %

 

Liquid Assets

 

In 3Q19, the Bank’s liquid assets amounted to Ps.158.8 billion, showing a 16% or Ps.30 billion decrease QoQ, and a 44% or Ps.48.8 billion increase on a yearly basis.

 

In 3Q19, LELIQs own portfolio decreased 36% or Ps.30.5 billion, in line with the strategy adopted by the Bank to reduce its exposure to Central Bank Notes.

 

In 3Q19 Banco Macro’s liquid assets to total deposits ratio reached 61%.

 

LIQUID ASSETS   MACRO Consolidated     Variation  
In MILLION  $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Cash     68,919       74,766       75,309       96,427       96,609       0 %     40 %
Guarantees for compensating chambers     5,384       5,720       5,735       5,992       7,102       19 %     32 %
Call     720       405       178       990       150       -85 %     -79 %
LEBAC own portfolio     651       0       0       0       0       0 %     -100 %
Leliq own portfolio     34,260       55,070       98,918       85,344       54,898       -36 %     60 %
Total     109,934       135,961       180,140       188,753       158,759       -16 %     44 %
                                                         
Liquid assets to total deposits     51.7 %     57.1 %     66.1 %     66.4 %     61.0 %                

 

14

 

 

  3Q19 Earnings Release

 

Solvency

 

Banco Macro continued showing high solvency levels in 3Q19 with an integrated capital (RPC) of Ps.86.8 billion over a total capital requirement of Ps.26.8 billion. Banco Macro’s excess capital in 3Q19 was 224% or Ps.60.1 billion.

 

The regulatory capital ratio (as a percentage of risk-weighted assets- RWA) was 26.5% in 3Q19, TIER1 Ratio stands at 18.9%.

 

The Bank’s aim is to make the best use of this excess capital.

 

MINIMUM CAPITAL REQUIREMENT   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Credit risk requirement     15,338       15,609       16,329       16,641       19,343       16 %     26 %
Market risk requirement     303       212       284       421       778       85 %     157 %
Operational risk requirement     4,199       4,616       5,189       5,959       6,627       11 %     58 %
Total capital requirements     19,840       20,437       21,802       23,021       26,748       16 %     35 %
                                                         
Ordinary Capital Level 1 (COn1)     49,097       52,285       58,520       59,406       69,629       17 %     42 %
Deductible concepts Level 1 (COn1)     -3,186       -3,047       -3,708       -4,160       -7,807       88 %     145 %
Aditional Capital Level 1 (CAn1)     0       0       0       0       0       4 %     6 %
Capital Level 2 (COn2)     18,058       16,875       19,092       18,740       24,972       33 %     38 %
Integrated capital - RPC (i)     63,969       66,113       73,903       73,986       86,793       17 %     36 %
                                                         
Excess capital     44,129       45,676       52,101       50,965       60,045       18 %     36 %
                                                         
Risk-weighted assets - RWA (ii)     242,411       249,781       266,581       281,700       327,312       16 %     35 %
                                                         
Regulatory Capital ratio [(i)/(ii)]     26.4 %     26.5 %     27.7 %     26.3 %     26.5 %                
                                                         
Ratio TIER 1 [Capital Level 1/RWA]     18.9 %     19.7 %     20.6 %     19.6 %     18.9 %                
                                                         
RWA - (ii): Risk Weighetd Assets, considering total capital requirements.                              

 

Asset Quality

 

In 3Q19, Banco Macro’s non-performing to total financing ratio reached a level of 1.9%, down from 2.12% in 2Q19, and higher than the 1.63% posted in 3Q18.

 

Consumer portfolio non-performing loans were unchanged while Commercial portfolio non-performing loans decreased 33bp in 3Q19.

 

The coverage ratio reached 124.16% in 23Q19. Write-offs over total loans totaled 0.4%.

 

The Bank is committed to continue working in this area to maintain excellent asset quality standards.

 

ASSET QUALITY   MACRO Consolidated     Variation  
In MILLION $   3Q18     4Q18     1Q19     2Q19     3Q19     QoQ     YoY  
                                           
Commercial portfolio     69,497